Current work in wildlife, rivers, public lands, and climate

Tuesday, August 16, 2016
Guardians Spurs Obama Administration to End Coal Industry Breaks, Ensure Mines Pay for Clean Up

WildEarth Guardians Petition Granted, Will Ensure Coal Companies Pay Up and Guarantee Reclamation
Contact: Jeremy Nichols, (303) 437-7663, jnichols@wildearthguardians.org

Washington, D.C.—Responding to a petition filed by WildEarth Guardians, the U.S. Office of Surface Mining Reclamation and Enforcement today announced it intends to overhaul regulations to ensure coal companies fully pay for the cost of cleaning up their mines.

“For too long, the coal industry has put the costs of cleaningup its mines on the backs of Americans, threatening to saddle our future with atoxic legacy,” said Jeremy Nichols, Climate and Energy Program Director forWildEarth Guardians. “Today’s decisionis a major step forward and puts us on track to ensure coal companies pay thecost of cleaning up their mess, not force Americans to shoulder this burden.”

The decision comes as some of the nation’s largest coalcompanies, including Peabody and Arch, have filed for bankruptcy and the coalindustry as a whole is facing an increasingly bleak future. Nationwide, coalproduction is expected to hit a 50-year low in 2016 and companies areincreasingly shuttering or reducing operations and laying off workers.

Under federal law, coal companies have to post a bond toguarantee the cost of cleaning up their mines, effectively an insurance policyto ensures the burden of reclamation does not fall to taxpayers. Federal regulations currently allow companiesto post “self-bonds,” effectively corporate IOUs, to satisfy bondingrequirements.

The practice has been called into question as severalcompanies relying on self-bonds, including Peabody, Arch, and Alpha, havefallen into bankruptcy, making their IOUs worthless. The prospect of companies folding and walkingaway from their operations is higher than ever, threatening to dump billions ofclean up liabilities onto the public.

For Peabody, the nation’s largest coal company and largestholder of self-bonds, the situation is dire. The company has more than $1billion in self-bonds in Illinois, Indiana, New Mexico, and Wyoming. After filing for bankruptcy in April 2016, thecompany technically cannot back up these clean up guarantees with even a penny.

In spite of this, states like New Mexico and Wyoming arecontinuing to allow Peabody to self-bond, claiming the current rules allow themto do so.

In March of this year, WildEarth Guardians petitioned theOffice of Surface Mining Reclamation and Enforcement, which regulates coalmining nationwide, to amend its regulations to ensurethat bankrupt companies aren’t allowed to self-bond. Today, Joe Pizarchik, the Director of theOffice of Surface Mining Reclamation and Enforcement, granted thepetition, announcing it intends to move forward to make changes to itsregulations.

In a statement,Director Pizarchik announced:

We know more today about financial assurance than 35 years ago and ourcurrent out-of-date self-bonding regulations aren’t working as intended. Togetherwith state regulatory authorities that allow, or are considering allowingself-bonds as a form of financial assurance, we can write a better rule, andtogether we can protect the public’s interest and the environment.

The announcement will be followed by a proposed rule change,which will be subject to public comment, and then the adoption of a final rule. For states like New Mexico and Wyoming, whichcontinue to allow bankrupt coal companies to self-bond, they will be requiredto secure actual sureties that fully guarantee mine clean ups.

“We applaud the Obama Administration for moving quickly toensure bankrupt coal companies are no longer allowed to avoid guaranteeingreclamation of their mines,” said Nichols. “For our climate, our lands, and our future, the coal industry has tostart paying the true cost of its mining, not passing the buck to Americans.”